Pending home sales in U.S. drop to 10-month low in October

Signed contracts for existing homes fell nationwide in October for the fifth straight month, further evidence the housing market has slowed after a frenzied rebound earlier this year.

The National Assn. of Realtors said Monday that its pending sales index, adjusted for seasonal swings, dropped 0.6% from September and was down 1.6% from its October 2012 level. The trade group said the government shutdown in early October, declining affordability and limited inventory curbed sales.

The index, which reflects signed contracts whose sales haven’t yet closed, is at its lowest level since December of last year.

“We could rebound a bit from this level, but still face the head winds of limited inventory and falling affordability conditions,” Lawrence Yun, the group’s chief economist, said in a statement.

After strong home price gains early this year, the housing market has cooled while buyers step back, struggling with those higher prices and also higher mortgage rates or simply frustrated over what had become seemingly never-ending bidding wars.

Pending sales rose in the Northeast and Midwest, but fell in the South and West.

In the western U.S., tight inventory and falling affordability helped push sales down the furthest, the Realtors group said. Pending sales there fell 4.1% from September and 12.1% from last year.

Although pending sales have fallen steadily in recent months, the trade group said it forecasts closed sales of existing homes nationwide to be nearly 10% higher in 2013 than last year.

[Updated, 9:47 a.m. PST Nov. 25: California last month bucked the national and regional trend in pending sales. The Golden State posted a 2.5% increase in pending sales in October from September, the California Assn. of Realtors said Monday. But the state’s pending sales were down nearly 10% from October 2012.